In the UK there has been a significant decline of our high streets, whether it was a unique fashion boutique or your local and dependable department store, we have sadly said good bye to many of our favourite stores.
The Decline of the High Street
Owning a successful store on your local high street has been a dream for many individuals in the UK for generations but unfortunately as of late, our UK high streets have seen a consistent and rather significant decline year on year. The decline of the high street had begun several years before the pandemic had disrupted our lives but the pandemic did increase the rate at which high street retailers were closing their doors.
Research conducted by PWC found that on average 38 stores closed per day in the first half of 2024 with only 25 new outlets being opened each day. This meant there was a decline of 13 retailers, hospitality and/or service outlets on average every day until the 30th June 2024, meaning that we saw roughly 2,250 stores across all of the UK's high streets shut their doors in the first half of 2024.
What factors are driving the decline?
Retailers are facing many challenges which are contributing towards the gradual decline of the UK high street. Some of the challenges being faced may be more relevant to certain business than others but these are the factors which have been attributed as being the main causes for the death of the high streets:
Changes in Consumer Spending & Behaviours
Since the pandemic consumer behaviours have changed drastically with majority of modern consumers favouring convenience and value for money from the goods they purchase, giving a clear explanation for the shift to online retail. This shift has provided consumers with access to an overwhelming abundance of choice for goods as well as competitive pricing. Therefore this has led to a reduction of brand loyalty that is shown by consumers, with them instead opting for a more price conscious approach to shopping.
When consumers are looking to venture outside their homes to spend what's left of their disposable incomes, they are commonly seeking experiences and entertainment in replacement of purchasing goods. Barclays bank conducted an analysis into consumer spending plans for summer 2024 and they found that the most substantial spending categories were community events, outdoor activities and holidays abroad. They also found that 13% of consumers felt less guilt when spending money on experiences.
Cost of Living Crisis
Many households are feeling the pressure on their disposable incomes due to the increased cost of living that has been felt in the last few years. Research conducted by the Office of National Statistics (ONS) confirmed that food and non-alcoholic beverage prices rose by on average 7.0% in the year up to January 2024. Households haven't only experienced an increase in food bills, energy bills have gone up too.
The ONS found that 41% of adults who pay energy bills said that it was very difficult to afford them. As more than a third of UK adults are struggling to pay for their heating and electricity bills as well as put food on the table, leaving households with a small amount of disposable income left at the end of the each month for their wants, resulting in lower sales and reduced growth for high street retailers.
High Rents and Increased Business Rates
The increasing costs of energy and rising rents have made it significantly more expensive for a business run a physical store along a high street and stay competitive with their online counterparts. Therefore most businesses that have the capacity and ability to move products and services online have done so, leaving the businesses who are unable to move online to battle it out for the disposable incomes of the few consumers who still opt to shop in person.
Rise of E-Commerce (Online Shopping)
We are firmly in the 21st century and are rapidly becoming more dependent on online shopping with e-commerce giants such as Amazon, Ebay & Etsy to name a few. This increased dependency could be due to the fact that there is a wider range of choice available, (access to the entire World Wide Web) or because it is in fact, often easier to purchase the goods from the comfort of your own home, instead of having to get into town and visit multiple shops to find what you're looking for!
Businesses That Are Struggling
The decline of the high street has affected many different types of businesses over the years but some are worse off than others. Here are some of the businesses that are facing these challenges head on:
Large Chain Stores
Many large chain retailers are struggling to keep up with the constantly developing landscape of online shopping, and being unable to retain loyal consumers due to cheaper prices available online.
An example of a name which is now rarely see on the UK high street is Argos, once a town centre staple, Argos has issued plans to shut many of its stand alone stores along UK high streets in favour of plans to replace several of the closed stores with smaller concessions within supermarkets to cut costs.
Department Stores
Over the years our high streets have been graced with local department stores run by families and chain department stores with ubiquitous names such as House of Fraser, Debenhams, and John Lewis, but in recent years we have seen many shutting their doors to physical shoppers across the UK.
A real hit to one of the most infamous high streets globally was when both Debenhams and House of Fraser shut their flagship stores along London's Oxford Street in favour of online retail. Many of the smaller department stores which operate regionally have also struggled to compete with online competition, which has led to many of them shutting up shop for good.
Fashion Outlets
Due to the rise of online fast fashion brands such as Boohoo, Shein and Forever 21 that pair low cost clothing with speedy delivery to your door, our high street fashion boutiques such as TopShop, Dorothy Perkins and Miss Selfridge have struggled to stay afloat, as costumors increasingly choose lower prices and the convenience of shopping online to the in-store experienece.
From a business perspective it's not just cheaper to run an online fashion retailer, Fashion brands can respond to new trends in a fraction of the time it takes to get physical products into a store. Online fashion retailers can instead keep their MOQ low, launch the product on their ecommerce store, and ship it out to consumers straight from the warehouse.
Banks
Throughout the world we have seen a global shift to online banking and this is abundantly clear by looking at our high streets, since 2015 more than 6,000 bank branches have closed across the UK. Llyods Bank found that of their 22 million UK customers more than 20 million of them choose to bank online rather than in branches. With such a small proportion of their customers utilising the existing bank branches and an increasing percentage of customers demanding an improved digital service, many UK banks are announcing further closures to allocate more funds to improving their online offerings such as Digital Helplines and in app improvements.
Who is Surviving?
In amongst the extensive list of shops that are struggling to survive this steep decline, there are several businesses which are thriving under the new market conditions, either because they are adapting to new consumer behaviours or have found a niche which promotes physical shopper behaviours.
Independent Retailers
High Streets have seen many independent stores thriving by emphasising a quality service and products which the owner has either hand picked or made themselves, which is difficult to replicate online. Success stories include bespoke jewellers, souvenir and gift shops, hair and nail salons, and cafes and bakeries selling fresh produce.
Experiential Retail
As I mentioned earlier, consumer behaviour has shifted towards people spending more of their disposable income on experiences which has led to the emergence of experiential retail such as the 'Tiffany Blue Box Cafe' in Harrods, blending high end jewellery shopping with luxury afternoon tea. Pop up shops and stands in shopping centres, promoting try before you buy for gadgets and technology products are also becoming a common feature of the physical shopping experience.
A business which has gone viral for its use of experiential retail is JellyCat, a cuddly toy company providing a completely unique retail experience, offering limited edition toys as part of in store themed campaigns. To give an example, the 'Fish & Chips' campaign, which proved to be a hit with customers involved toys being 'cooked' by a sales assistants in stores that were decorated to look like Fish and Chip shops, providing a fun and memorable shopping experience for customers.
Businesses that combine Online and Offline Shopping
Many retailers surviving the high street decline, provide customers with both online and offline buying options, allowing them to target a range of consumer behaviours, and attracting them back to the website after they have visited in store.
Combining online and offline shopping also allows businesses to provide more convenient options for consumers to ensure that they have a highly flexible shopping experience with the freedom to choose between online delivery, click and collect, and online stock checking prior to visiting the store.
